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ANTI-CAPITALISMAND

BUSINESS

CHARLES G. KOCH

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\NT1-CAPITAL1SM AND BUSINESS

( h a r m s g . kocm

a b o u t th e author

Charles G. Koch is President of Koch In­dustries, Inc,, o f Wichita, Kansas, and also serves as President and Chairman of the Board o f the Institute for Humane Studies Inc.

1 his address was presented at a seminar on “The Anti-Capitalist Mentality,” held inconjunction with the annual meeting of the In stitu te 's board o f directors in Dallas, Texas, on April 27, 1974. In addition to Mr.

included and iourr

theKoch, the seminar lead no ted American economist and journalist, Henry Hazlitt, and Ronald Max Hartwell, distinguished professor o f economic history at the University o f Oxford.

. ,-o p ie s arc available upon request from: Additional copies

nia 94025

Anti-capitalist feelings in the United States are probably more virulent today than ,-vcr before. Yet the efforts to stem this challenge to our tt i i economic values have been ineffective. It is crucial that we understand what is happening, why the de­fensive efforts have floundered, and what approach, if any, would succeed.

Shortly before he became Associate Jus- ti «* the Supreme Court, Lewis Powell, in his famous Powell Memorandum, described the current contempt for business. Powell noted that in r. trust r! : p. nod • our history, anti-business sentiment was not being propagated merely by a tew radicals. Th present assault on the enterprise sys n is broadly based and rapidly gaining momen­tum and converts I oday’s antagonists are numerous, well financed, and increasingly welcomed and encouraged tl elements ('l society.

Powell illustrated the tone, the character, and the intensity of the attack by citing statements of a few heroes of the young. William Kunstlor. the activist attorney who is a popular speaker on campuses, proclaims “You must learn to fight in the streets torevolt. to shoot guns. We will learn to do allof the things that properly owne rs fear.”The self-appointed consuniier eidvoca te.Ralph Nader, declares that a great nianyexecutives of major corporati ons should beimpnsijned for defrauding tllie public andwillful ly producing unsafe prod ucts. Asproof of the potency of these attac ks.

1 -

finally, in nprhancstep, business his ' , mof! gricv°us mi* - 'ras consciously assisted the

0 Uestro>'ing the free marketgovernment; ^ - . c a I ly , businessmen have been at th*

entetprise CAs^mLc!"V '°I! dcstro>'in8 free P AS Prolessor Oabnel Kolko notedin his book on the Piogressive era. J'lw){' Cnn^rus.n*...------1" iW Tri~J “ ”l5*rv<*nsm. certain key business­men at the turn of the century were an,™,

<0 major initiators of federal intervention in the economy. Kolko also observed tha! it

^ L d ° ! [ i , ‘ V r r nw 0’ mono»x>,ycaised the federal government to intervene in the economy, but the lack of it Several other scholarly studies have confirmed the tact that monopolies cannot be maintained by private means alone As businessmen came to realize this, on many occasions they simply turned to the government for special privileges and protection from competition.

The process apparently still continues. Hence, those who blame the oil industry for the energy crisis arc correct in the sense that the oil industry did encourage misguided government regulation. Over the years, for instance, the industry sought oil proration­ing and import quotas, and it approved the

wage and price controls. Subsequently it has called for federal allocation programs and gasoline rationing.

1

S I perceive the situation in which the capitalist businessman find hnnwn t-> there are basically four ways in which

an tight for free enterprise - through ation. through the media, by legal eta .c and by political action. As a believe ie market economy, 1 appreciate! ie fits of specialization and the division ot \ Therefore, in general 1 ,each businessman do what his o

i -iii,iw him to do best. I uoand resources allo w him lo > ;iltain, however, 11 ‘‘l 1 1 , thc most. is both the most vital and u\c

neglected. As Professor F. A. Hayek has acutely observed, “Unless we can make the philosophic foundations of a free society once more a living intellectual issue, and its implementation a task which challenges the ingenuity and imagination o! our liveliest minds, the prospects of freedom are indeed dark.”

By education. 1 mean basic scholarly re­search and writing which will provide us with better understanding of the market sys­tem and bettor arguments in favor of this system We desperately need to develop ad­ditional talent capable of doing the research and writing that undergird the popularizing of capitalist ideas. Business has so neglected this approach that when, for example, a project to study free-rnarket ideas is funded, the biggest problem is finding someone will­ing 3nd able to do the work. While business has sometimes shown an interest in establish­ing appropriate chairs at Universities, there is

1 rst-rate talent available that .this efiort lias often resulted merely in a shift of one of the few free-market scholars from one university to another.

Many things can be done to develop this talent: financing fellowships lor graduate students to work under teachers sympathetic to the tree market, sponsoring conferences where scholars and students gather to discuss the market economy; arranging publics and distribution of scholarly books; arid in­suring that able students can find attractive opportunities as teachers or research schol­ars. But business must make its funds avail­able for Such purposes and use its influence to provide openings. I believe that this long­term, educational approach is absolutely necessary to restore the free enterprise sys­tem.

Nevertheless, organizations like the Insti­tute for Humane Studies that are active m this educational effort have had trouble rais­ing funds from business. This puzzles me

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because education is by all odds »h» economical and productive of anv ways we can pursue. The educational mJth od enables the businessman to work eiW lively without exposing himself to the v • T pub ic criticism that the other methods n ticularly politics, seem to evoke Peril n ^ * businessmen have overlooked e d u £ f c cause we have been too impatient and thu« tailed to recognize that the usual business standards for returns on long-term invmti ments apply in this area as well *'

Unlike educational programs that produce new advocates, the alternative approaches - utilizing the media, the courts, and politics

lull in the category of self-defense. But Self-defense is necessary, and I recommend

" . '■ •• • er, t :this effectively, business must keep its own house in order. Its defense must not backfire and make it even more vulnerable. Thus, we cannot speak out for free enterprise ai i the same time lobby for special privileges and limits on competition. This issue may create division within the business com­munity. but it should be faced up to so that, if necessary, the lines may be properly drawn.

We should utilize the media in speaking out in our defense, but we should make a sound intellectual exposition of our point of view. There should he no hesitation to at­tack the enemies of the free market, such as the Naders, as aggressively as possible. And we must appropriately "reward" the media when they promote the free market, but withdraw support when they attack

Concerning the use of legal challenges. Professor Henry G. Vlanne of the University of Rochester advises that “‘the business com­munity utilize available techniques of legal adversary proceedings to announce publicly and vigorously, both as individual companies and through associations, that they will not

rale With the ^ v e ^ m e n . beyond . he c0operate minimum in de vlegally oomPi any control programs. HcomP '^ i r i hr . o “publicize as W ide*,as

mis-*Pl>'in? W‘n' n to “p u b l i c asw id5es businessmen ^efficiencies,possible the lhal wiii de— r!»U> and hu’̂ ]s- and adds that “busi-with these co"1 ‘]n [he public understand nessmen should ^ o f arrogant. inttu-!ha' tews, lies in the barest pos-

• m refusal to cooperatesible obedien |ettcff 0f the law.

ond oeratior ind u ;ssful ^ r ^ e recent inde-

imckers strike and the gasoline shutdo n But ■ h uld iteo con-

id • the possibilities of strat icallj planned i:t. tion ii'id adininistniu e pi^ccuu: -

•: ■ • th( -i. politi *! tit I . '■•••been the most widely used by businessmen and, while seemingly .successful in some cases, has overall proved least fruitful. I be- :: tl 1 :i f<•; till failure ipolit refl ;t • hat the; believe to be the view of their constituents, and this majority view has been formed over tile

■ I ' aaliSti !.: ,:;i f;,<| ,i: ,1 : bj tiv . p( liti d activity

r ’ ' and j. icould include, for instance, litigation to

“ „ ^ m an^ o u w " ° ‘~ d y.1 urtiier, we muei

political approach conWm’T ,‘hat a direc< E ? Pasl hk,orV indicaipV.I!",lnherent

Ians

he“d"« m a„ b ; ‘ > ‘hat, once a* 'VP'cally aUcn,p bU 0P^ lltal ^

advantage over J ! * 0J * to gain anand at When ,his

"tong public reaction a„ h n 11 d°«sn't a ,0" -ttatnst business devel

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air i*: n t o

tive than 1he°(l)lI,|IC:,t activity is lessrnen should ,|i!er approaches, und b ‘'effec*

a,,ocate

a>nsidcra,lon to^ h ig h ly l ,v 'n ”' . PrT m *****

tho,s° whose influence8on "oth 1 We reach m ultiplier effect n , ,, " otl m ***»*«*programs w e superior to poHtical actio U0I,>I support o f taJentoH fr -1 V ‘ ■ :M i e t o Z 2 2 & S ? * '* * * *

The development of a well financed cadre o sound proponents o f the free enterprise philosophy is the most critical need facing us a t tne moment. And this task isiiotimprac-

ii. As the Powell Memorandum points o u t. “ business and the enterprise system are In deep trouble, and the hour is late." But the system can be restored if business wili re-examine itself and undertake radical new effo rts to overcome the prevalent anti­capitalist mentality.

The Institute for Humane Studies wa« g * » * g in 1961 as an independent center to fostef re research and advanced study for the strengthen- ing of a free society. Through conferences, lowships, publications, and related activities, the Institute seeks to serve scholars in all the humane sciences who are interested in the principles o liberty.

Interested persons ir education, business. am thb professions throughout the world share in its work and participate in the programs it sponsors.